Fair Trade Commission to Abolish 'Lawsuit Permission System' That Delayed Consumer Group Lawsuits... "Aiming to Revitalize Group Litigation"

Partial Amendment to the Consumer Basic Act Open for Legislative Notice Until May 24

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) has decided to abolish the litigation permission procedure that delayed class action lawsuits filed by consumer organizations. This move aims to revitalize class action lawsuits. Additionally, to enhance consumer rights, the FTC plans to establish the Consumer Rights Promotion Foundation and grant the Consumer Policy Committee the authority to request relevant data submission from businesses for conducting surveys.

The FTC announced on the 12th that it has prepared a partial amendment to the "Framework Act on Consumers" containing these provisions and will open it for public comment until the 24th of next month.

The proposed amendment abolishes the litigation permission procedure, which has been pointed out as a factor delaying lawsuits and hindering the activation of class actions. Currently, consumer organization lawsuits require a separate procedure to obtain permission before filing the main lawsuit or provisional injunction.

An FTC official explained, "Class action lawsuits are a system that allows legally designated organizations to request the prohibition of illegal acts for the public interest, aiming at prevention in advance, which differs from mass lawsuits seeking monetary compensation after the fact. Since the system was introduced in 2006, only eight cases have been filed, showing low utilization, and issues such as lawsuit delays have been pointed out."

Accordingly, the FTC decided to eliminate the permission procedure through consultation with the court administration office. The FTC expects that this will allow provisional dispositions to be made simultaneously with the filing of lawsuits, enabling the class action lawsuits to properly function in preventing the spread of consumer damages.

The scope of entities eligible to file consumer organization lawsuits will also be expanded. Currently, registered consumer organizations with the FTC, the Korea Consumer Agency, and economic organizations are eligible; the amendment adds "consumer organization councils" to this list.

Furthermore, class action lawsuits can be filed not only in cases of direct infringement of consumer rights but also when "significant infringement of consumer rights is anticipated." Since the requirement of "anticipated infringement" alone could excessively broaden the scope of claims, the amendment adds the condition of "significance."

In addition, the amendment includes provisions allowing the FTC to establish the Consumer Rights Promotion Foundation to support and foster consumer rights and consumer organizations. The foundation will carry out consumer education and information provision projects, consumer counseling and dispute mediation for damage relief, operation of consumer organizations, and projects entrusted or funded by businesses under consent agreements stipulated by related laws. The FTC will approve the foundation’s business plans, receive reports on business performance and financial statements, and supervise its operations, accounting, and assets.

Moreover, the Consumer Policy Committee, a decision-making body chaired by the Prime Minister, will be authorized to conduct surveys on consumer behavior, transaction status, and market consumer orientation to promote consumer rights and announce the results. If necessary for the survey, the committee may request relevant data submission from businesses, and businesses receiving such requests must comply unless there is a legitimate reason not to.

During the public comment period, the FTC will collect opinions from stakeholders and related ministries, then proceed with regulatory and legislative reviews, followed by approval from vice ministers and the Cabinet meeting before submitting the amendment to the National Assembly.

This content was produced with the assistance of AI translation services.